Simon Lee presented the 1H numbers on Tuesday and being in the City was better attended with fund analysts more than property ones. There was no fund raising so the share price has started to recover. The fund is up 47% since the IPO and shortly to become a FT250 constituent.
The LXI portfolio is currently worth £840m, some 2 years after IPOing at £200m and invests in inflation protected property assets with very long income long leases. LXi REIT reported an EPRA NAV of 119.56p ( up of 4.3% and above the £200m raised at 118p a share price). The NAV 1H total return was 6.8% and the PLC has a 8% annual target. The key drivers of performance include the impact of four forward funded assets completing, 40 index-linked rent reviews in the period (avg. 2.2% uplift) and the issue of equity at a premium to 113p EPRA NAV in June. The adjusted EPS was 2.93p, fully covering the dividends of 2,875p ( paid quarterly) which is targeted to be 5.75p for the year, ‘ on course’. Operating profits were £36m (£18m, smaller PLC then at £320m portfolio). The LTV was 20% with 35% the medium term max. The average cost of debt was 2.94%. for 12 years, much supplied by SWIP and Lloyds Bank. The externally managed fund currently invests in 9 sectors with 50 tenants, top covenants sort and strategically important assets invested held. The WAULT is currently 22 years. Currently Travelodge/Premier Inn (16% of portfolio) and a growing South East weighting emerged ( 21%) because of the discount store expansion plans that LXI are helping forward fund. After last week’s Biggin Hill deal RNS, Bombardier is now the 4th largest tenant and on a 35 year lease. Industrial makes up 28% of assets, budget hotels 24% and across the UK. Fixed up lifts make up 19% of the portfolio, RPI adjusted 57%, CPI 20% and 4% open market. Liquidity has been enhanced since the £200m fund raise with over 1m shares a day traded. .
Clearly inflation is a major and future driver of rent for shareholders and page 14 of the presentation states that ONS RPI inflation for the next 5 years is set to average almost 3% pa. The open market rental growth forecast is for 0.5%. 98% of LXI’s leases are index linked/fixed. 73% have a 4% cap, 60% collar…
